Henry Bigg [Jimmy Keegan] learns that his parents have been lost during an archaeological trip to Africa, though the remains of their aircraft have been found. His housekeeper, Mrs. Evans [Mona Marshall], explains that Augustus is his legal guardian. The reveal sets Henry on edge, but the home itself hides a far smaller drama—two tiny people living inside the walls.
Inside Henry's house, Tom Little [Donavan Freberg] and Lucy Little [Bettina Bush] move with quiet purpose. They snatch an apple that Mrs. Evans had left for Henry, and the gesture earns them a surprising repayment: they locate his lucky rabbit's foot and tuck it into his suitcase. A misstep of fate carries them to Augustus' residence, trapped inside Henry’s luggage, where they’re soon found by Grandpa Little [Alvy Moore] and Dinky Little [Robert David Hall], two Littles who quickly recognize Augustus’ true nature.
Henry moves to Augustus' mansion, and Mrs. Evans notes that she cannot stay—Augustus does not want a housekeeper. Augustus pretends to be welcoming in front of Mrs. Evans, but once she’s gone, he drops the mask and treats Henry as if he were a burden, insisting he won’t tolerate any crying as he shepherds the boy to his room. The Littles learn that Augustus is not merely stern but calculating: he intends to replace Henry’s family home with a shopping mall and reshape the property to his own gain.
From pen to paper, the Littles uncover a carefully staged con. Augustus has forged documents to establish himself as Henry’s guardian and to pave the way for the demolition of the Biggs’ property. Henry, initially unaware of who he has found, encounters Grandpa [Alvy Moore] and Dinky [Robert David Hall] in his study and realizes these visitors are more than meets the eye. The villain’s schemes begin to crumble when the Littles reveal the fraud, but Augustus acts fast, locking the two new “toys” in a desk drawer to prevent discovery.
A daring rescue unfolds. Lucy persuades Tom to speak openly to Henry—a bold move given that humans had not known the Littles existed until recently. Henry’s growing trust in his tiny allies becomes the key to unveiling the truth. The two Littles, along with Henry, piece together Augustus’ plan and the evidence of forgery, and Henry orchestrates a diversion that buys time for Tom [Donavan Freberg] and Lucy [Bettina Bush] to slip free and save Grandpa [Alvy Moore] and Dinky [Robert David Hall].
Yet danger remains. Lucy and Tom are soon hungry, and Tom finds himself trapped in a jar of honey, forcing the Littles to shift priorities: they must save Henry before they can rescue Tom. Grandpa resists at first but agrees, recognizing that Henry has begun to trust them in a way that changes everything.
With the stakes higher, the Littles launch a daring escape aboard a gas-powered toy plane. The flight triggers a garage fire that wakes Augustus, who wakes to the upheaval in his meticulously ordered world. Henry tries to reach the police station, but the pursuit ends with him getting lost and captured by his uncle, while the Littles work to stall Augustus long enough for Henry to reach safety.
Augustus, sensing his window closing, orders a demolition crew to tear down the Biggs’ house. When the Littles finally reach Henry’s home again, they split up to tackle the threat from multiple angles: Grandpa searches for Mr. and Mrs. Little, while Lucy, Tom, and the others sabotage the bulldozer. Their plans align in a tense, near-miss moment, allowing Henry to reach a police officer just as Augustus arrives.
The law closes in on Augustus: the officer arrests him for illegal destruction of private property, forgery, and child abuse. Henry is joyfully reunited with Mrs. Evans, and a larger miracle unfolds as his long-lost parents are rediscovered and headed to the airport. Henry shares a knowing wink with the Littles from the gate, a small celebration of the new balance between the human world and the world living just beyond the walls. The Littles, ever-watchful, remain nearby, ready to watch over the boy who now understands that friendship, courage, and a little cleverness can change a life.
